Archive for March, 2005


March 31st, 2005 14 comments

There’s an interesting story in today’s Fin (subscription only) about a study of a remote NT Aboriginal community which found that government spending per person there was substantially less than the average for NT residents in general. I don’t know how general this is, but I’ve seen similar results before. The idea that “we have spent massive sums of money on Aboriginal problems and have nothing to show for it” is based on dubious empirical assumptions. A common source of this thinking, at least when ATSIC was around was to look at the total amount allocated to Aboriginal health, education and so on, without netting out the amount that would otherwise have been spent through the mainstream health and education budgets.

Also in today’s Fin, I have a piece on oil prices. Most of it will be familiar to readers, but I’ve put it over the fold anyway.
Read more…

Categories: General Tags:

Should we be scared of Uncle Sam ?

March 30th, 2005 65 comments

This poll showing that 57 per cent of Australians thought US foreign policy to be as great a threat as that of Islamic fundamentalism provokes a variety of thoughts. I happened to read the poll results on the same day as this NYT story about Maher Arar, whose ‘extraordinary rendition’ has been covered in detail at Obsidian Wings.

There are various ways of assessing threats, and most Australians rightly regard terrorism as an overstated danger. But, as far as terrorism is concerned, there can be few instances more horrible and terrifying than the kidnappings and televised beheadings we’ve seen in Iraq. There are, however, equally awful things going on that are not televised, and that are carried out by the United States government.

An unknown number of people have been kidnapped, then shipped to torture chambers in unknown locations. We’ve found out about this from cases like that of Maher Arar, who was eventually released after his captors gave up on the idea that he was a terrorist, but it’s likely that in most cases, the victim simply disappears and is never seen again. Arar was in transit through the US when he was grabbed, but there have been similar kidnappings in Italy, Sweden and Macedonia and of course, countries like Iraq and Pakistan are free-fire zones.

As with quite a few of the worst policies of the Bush administration, the practice of extraordinary rendition apparently began under Clinton, but has been greatly expanded by Bush[1].

As far as I’ve seen so far, all of the victims in this cases have been Muslims. If that comforts you, perhaps you ought to read Martin Niemoller

As long as extraordinary renditions and similar practices continue, Australians are right to regard at least some aspects of US foreign policy as a threat comparable to that of Al Qaeda.

An update In the comments thread at Crooked Timber, Katherine observes, correctly I think, that arguments about moral equivalence are counterproductive. As she says ‘“Are we better or worse than Zarqawi and Bin Ladenâ€? is the debate people like James Inhofe and George W. Bush want us to have. ” So, I shouldn’t have said “equally awful” above. But what is being done is awful, and such things are contributing greatly to the fear of US foreign policy I referred to.

fn1. Supporters of the Clinton Administration might usefully think about this the next time they are tempted to take a small step on the slippery slope of curtailing civil liberties. Supporters of the current Administration might want to give some thought to the likelihood that the practices they are now defending or assiduously ignoring will sooner or later be directed by Hillary Clinton, who might well choose to use them against the vast right-wing conspiracy linked, at its extremities, to Oklahoma City (the apparent starting point of extraordinary rendition) and to terrorist attacks on abortion clinics.

Categories: World Events Tags:

The case for federalism

March 30th, 2005 40 comments

Having established that the idea of ‘regional government’ makes no sense in the Australian context, let’s look at the real issue of centralism versus federalism. Would we be better off without a unitary system in which a single national government controlled everything [1]? I don’t think so[2]. I’ll present my case over the fold. You might also like to look at Ken Parish, Gary Sauer-Thompson and Andrew Norton. The Currency Lad disagrees, endorsing Keating’s view of the Senate, and Whitlam’s view of the states.
Read more…

Categories: Oz Politics Tags:

Another terrible earthquake

March 30th, 2005 Comments off

There’s not much to say about the latest earthquake in Indonesia, except to hope that no worse news comes in from places that have not yet been contacted. Our thoughts go to those who have lost homes and loved ones.

Categories: Life in General Tags:

Happy Birthday to me!

March 29th, 2005 29 comments

Well, today is my birthday. A gentleman never reveals his age, but it’s a perfect square[1]

fn1. And not the subject of a Beatles song

Categories: Life in General Tags:

Regional government

March 29th, 2005 47 comments

I’ve long promised a post on why regional government, an idea favored by both Whitlam and Howard, is a silly idea. If people want a unitary system of government, with the national government absorbing all the powers currently exercised by the states, they should say so, instead of flirting with this figleaf.
Read more…

Categories: Regular Features Tags:

Monday Message Board

March 28th, 2005 29 comments

It’s time for the regular Monday message board, where you are invited to post your thoughts on any topic. Discussion starter: what did you do on the Easter holidays. Civilised discussion and no coarse language, please.

Categories: Regular Features Tags:

Nasty easter eggs

March 27th, 2005 4 comments

I’ve been trying to resolve my comment spam problems, including false positives, but without much success, as you can see from the recent comments. Please bear with me, and put up plenty of real comments to push these guys off the front page, while I try to delete them once and for all.

Categories: Metablogging Tags:

Howard channels Whitlam, part 2

March 25th, 2005 27 comments

The increasingly centralist tendencies of the Howard government have been obvious for a while. Howard’s latest statement that Australia would be better off without state governments is only a bit stronger than what he said last year. As I pointed out at the time, both Whitlam and Howard are wrong on this, and the whole idea of regional governments won’t stand up to even cursory scrutiny.

What makes the statements more significant now is the fact that Howard has control of the Senate and can therefore repudiate the GST deal had, more generally, do whatever he likes. It will be interesting to see whether professed defenders of federalism, like the National Party, stand up to him on this.

Categories: Oz Politics Tags:

Bankruptcy again

March 24th, 2005 13 comments

I’ve been reading Todd Zywicki’s paper An Economic Analysis Of The Consumer Bankruptcy Crisis (1Mb PDF). Zywicki’s approach is to look at aggregate time-series data on a set of suggested causes of rising bankruptcy, suggest that the pattern for these time-series doesn’t match the observed increase in bankruptcy, The main point is, as he says,

Static or declining variables, such as unemployment, divorce, or health care costs, cannot explain a variable that is increasing in value, such as bankruptcy filing rates.

Hence, he says, the ‘traditional model’ of bankruptcy as a “last resort” outcome of financial distress is no longer valid. He therefore falls back on the residual hypothesis of changes in consumer behavior in the form of an increased willingness to resort to bankruptcy, possibly due to the rise of impersonal modes of lending and the decline of moral sanctions. Zywicki doesn’t mention the other obvious residual possibility: an exogenous increase in willingness to lend to high-risk borrowers, but symmetry suggests he ought to.

I don’t think Zywicki’s is the ideal research strategy (see below) but it has the advantage that anyone can play, armed only with Google. So let me point to a variable that has risen in the right way and could reasonably be expected to lead to rising rates of bankruptcy. That variable is the volatility of individual income, or, in simpler terms, the economic risk faced by the average person.

What this means is that the bankruptcy ‘crisis’ is an outcome of the general changes in the US economy over the past 30 years or so. If it weren’t for expanded credit and increased reliance on bankruptcy, the distress caused by growing inequality and income volatility would have been substantially greater. If bankruptcy laws are tightened, distress will increase. To put it simply, bankruptcy is the lesser of two evils.
Read more…

Categories: Economics - General Tags:

Polls and markets

March 23rd, 2005 12 comments

For those interested in this continuing debate, Andrew Leigh and Justin Wolfers have a new paper (PDF) comparing the performance of polls and betting markets in predicting election outcomes.

For what it’s worth, I think the two are about equally good, at least when an election is about to happen. There’s no indication that markets have significant private information: for example, they react, and sometimes overreact to ‘news’ that turns out, in retrospect, to be misleading. But most of the time, they provide a pretty good summary of available public information.

This is not too surprising to me. Although I’m strongly of the view that financial markets are not fully efficient in the semi-strong sense of making optimal use of all public information, the violations are subtle (but important!). Tests of election markets simply don’t have the resolution to pick up subtle violations, as opposed to occasional single-point observations, for example, the collapse of the Bush bet when the first exit polls on election day suggested a Kerry win.

Back on the air

March 23rd, 2005 Comments off

Crooked Timber the mainly-academic group blog of which I am one-fifteenth, is back on air with a dedicated server and has published a big backlog of posts. Read and enjoy!

Categories: Metablogging Tags:

Draft submission to Parliamentary inquiry

March 22nd, 2005 29 comments

At the suggestion of Andrew Bartlett, I’m planning on putting in a submission to the Parliamentary Electoral Matters Committee, which is currently conducting an inquiry into the electoral laws, as it does after every election.

The topic is the possibility that the Government may change the Electoral Act to require websites containing electoral material to identify a person authorising its content.

Comments would be much appreciated.
Read more…

Categories: Metablogging, Oz Politics Tags:

A bit more on education

March 22nd, 2005 11 comments

One interesting piece of information in the education debate surfaced yesterday. This was a study of disadvantaged kids undertaken by ACER for the Smith Family, which found that, on average, they underestimated the level of education required for the jobs they hoped to get and, correspondingly, planned to finish education too early. This was true both for boys (who mostly wanted trade jobs) and for girls (who were hoping for professional jobs). You can get the whole study here (PDF).

On the whole, this does not look good for Howard’s suggestion that leaving school at year 10 is a sensible idea. Of course, there are exceptions. If you have a job lined up, with a skilled trade apprenticeship and TAFE entry, this makes sense. But in this rare case, you probably don’t need the PM’s advice. The actual labour market experience, and educational attainment, of people who leave school in Year 10 is, in general, far less favorable than this.

Conversely, if the idea that parents are too concerned with encouraging their kids to go university had any basis, it would presumably be reflected in a decline in the wage premium for university graduates. No such premium decline was observed during the 1990s, despite the huge expansion in graduate numbers. Now that the number of domestic students has been held fixed for nearly a decade, it is likely that the premium is rising.

Categories: Economic policy Tags:

Access problems

March 21st, 2005 5 comments

I’m having intermittent trouble getting access to the blog. For reasons i can’t fathom seems to work better than, so if you’re having problems, you may want to try the same.

Categories: Metablogging Tags:

Easter treats

March 21st, 2005 12 comments

Well, we’ve bought our Easter eggs and Easter bilbies, and we’ve had plenty of Hot Cross Buns. I used to like those solid candy eggs when I was young, but they seem to have gone out of favour, and they’d probably be too sweet now anyway. Does anyone have any other seasonal treats they can recommend (or, for that matter, warn against).

Categories: Life in General Tags:

Monday Message Board

March 21st, 2005 61 comments

It’s time for the regular Monday message board, where you are invited to post your thoughts on any topic. Discussion starter: What did you do for the Easter holiday? Civilised discussion and no coarse language, please.

Categories: Regular Features Tags:

The Economist on Turkey

March 20th, 2005 10 comments

One thing that’s struck me about the recent wave of triumphalism regarding good news from the Middle East is how rarely Turkey is mentioned[1]. Yet Turkey’s progress towards full-scale Western-style democracy over the last few years has been by far the most hopeful development in the region over this period.

And the Bush Administration has played a positive (if occasionally unsubtle) role here, strongly backing Turkey’s application to join the EU, which is the main motive for reform. Yet this never seems to get a mention, while the fact that the absolute monarchs of Saudi Arabia have decided, like their counterparts in Communist China, to permit municipal elections is presented as if it’s a democratic revolution.

For those interested, The Economist has an excellent survey.

fn1. Except in the context of Thanksgiving.

Categories: World Events Tags:


March 20th, 2005 34 comments

There’s already been a bit of blogospheric response to the latest study on wasteful consumption (PDF) by Clive Hamilton and others at the Australia Institute . As Andrew Norton notes in the comments to Jason Soon’s post, the study reflects Clive’s rather ascetic wordview, one not shared by the majority of Australians. And, no doubt, waste is in the eye of the beholder. To take one of Clive’s examples, I must admit to buying books and not reading them, at least some of the time, but I can find excuses for this, whereas I’m scandalised by the idea of throwing out perfectly good clothes because they’re out of fashion.

That said, I think that, unless you are willing to take a completely agnostic view of social trends of all kinds, it’s hard to avoid the conclusion that the present period is one of generally excessive consumption. There are underlying economic causes of this, including low interest rates, easy credit and an economy that rewards successful speculation more than effort[1]. This in turn produces a demand for cultural celebration of consumption which reinforces the whole process. The wheel must turn and I think Clive is right to give it a bit of a shove.

And, leaving aside the fact that an excessive focus on consumption is bad for us, Tim Costello was spot-on on TV pointing to the moral obscenity of allowing children to starve while we making strenuous efforts to acquire trivial items for ourselves. No-one is perfect here, but, as I’ve said before, we all seemed a lot happier when we were putting a bit of our spare time into the tsunami aid effort. If we could keep this up, the world would be a much better place.

Such things are cyclical: material prosperity was just as eagerly celebrated in the 1950s, and this produced the anti-materialist reaction of the 1960s.

fn1. And even where wealth is produced by effort, it commonly takes the form of a capital gain, on the sale of a business, a renovated home, or whatever.

Categories: Life in General Tags:

Timber Tour

March 20th, 2005 5 comments

While Crooked Timber is out of action, I thought I’d tour the sites of those Timberites who maintain individual blogs in addition to posting on CT. There’s a lot of overlap with CT, and too much to describe everything so I just thought I’d give you a sample:

* Eszter has a Flickr album of Chicagoland. I need to look into this.

* Kieran has a review column, including one of The Money Game by ‘Adam Smith’. I got this as a school prize when it first came out way back when, and was really impressed. It played quite a big part in steering me towards economics.

* Over at John and Belle’s they’re debating the hardy perennial: was Communism as bad as Nazism ? I had a go at this a while back. Also, Belle puts in a bid for the Nobel Peace Prize

* Brian is going to a philosophy conference where the usual questions of existence, meaning and so on will be complicated by a union boycott of the main venue

* Daniel is threatening a Welsh-triumphalist post about the Six Nations when we get back on air, but hasn’t gone so far as to reanimate his blog for the purpose.

For the rest of the team, you’ll just have to wait until our hosting negotiations are concluded.

Categories: Economic policy Tags:


March 19th, 2005 12 comments

Former blogger James Morrow is setting up a magazine called Investigate. As long-time residents of Ozplogistan will recall, Morrow is fairly firmly on the political right, but he was kind enough to invite me to contribute a dissenting column for the opening issue (and maybe a regular feature). Due to email foulups, the piece I sent him didn’t get through, and it will be thoroughly obsolete by the next issue, so I just thought I’d put it up on the blog for anyone interested – some of it has already appeared in blog post form, but I thought I wrapped it up into a pretty good rant.
Read more…

Categories: Economic policy Tags:


March 19th, 2005 12 comments

I’ve been in Melbourne for the last few days, giving seminars at university departments and talking to people at the Productivity Commission and a roundtable the ACCC. The ACCC event had some very interesting discussion of behavioral economics and its implications. When I get time I’ll do a post on it.

Meanwhile, the Internet has given me nothing but problems. I was trying to deal with comment spam and anti-spam overkill on flaky dialup connections, which was no fun at all. GMail was horribly slow and unresponsive. Then when I got home I got the news that Crooked Timber has been shut down by our hosting service for overloading the database.

All back to normal soon I hope.

Categories: Metablogging Tags:

Education and central planning

March 18th, 2005 48 comments

The argument about Voluntary Student Unionism is interestingly summed up by a letter in today’s Age, supporting the government. The writer, an employer, asks us to imagine the outrage that would arise if he told his employees that they had to pay $500 in return for a range of the kinds of services typically provided by student unions.
Read more…

Categories: Economic policy Tags:

False positives

March 17th, 2005 2 comments

Apologies yet again to everyone having trouble posting comments. My anti-spam software is too aggressive, but as soon as I relax it I’m flooded with spam. I’ll have another go at resolving this as soon as I can get some free time. One suggestion that seems to work for some is to use a different email address. If you can’t get through you can email me directly and I’ll post your comment when I get time.

Categories: Metablogging Tags:

On the internet, nobody knows you’re an LWLB

March 16th, 2005 36 comments

Not surprisingly, a lot of bloggers are concerned about this report suggesting anyonymous blogging on political topics may be illegal. I had a few thoughts on this.

Closest to home, while I’m not anonymous[1], I welcome comments with or without anonymity. I don’t think there’s a problem here – any comments on this site are “authorised” by me, although I may not agree with them. As I’ve mentioned a few times, I reserve my right to delete or expurgate offensive comments, though there may be a delay for one reason or another.

Second, I don’t think it’s sensible to assume that the Internet is some kind of special free-fire zone where ordinary law does not apply. If a rule is right for print on paper, it’s probably right for text on a screen. If it’s wrong for the Internet, it’s probably wrong as applied to pamphlets.

Third, if a natural reading of the existing law is that it’s illegal to publish your political opinions under a pseudonym, the obvious question is: Why? I can’t see any possible justification for such a rule. It seems reasonable to prohibit dirty tricks like publishing something purporting to represent the views of your opponents, but the general tradition of writing as “Cicero” or “A modest member” is a well-established and honorable one. The idea that special rules are needed during election campaigns is an outdated relic, the kind of thing that used to give us a three-day blackout of electronic media.

Finally, where does Misha Schubert get off putting bloggers and spammers in the same headline? Maybe I should write something saying “state governments are considering uniform defamation laws, which would apply to journalists and spammers”.

fn1. That is, unless you believe the rumours that I’m really Imre Salusinszky posting under a false name and picture.

Categories: Metablogging Tags:

Negative income taxes

March 15th, 2005 10 comments

Reader Hans van Leeuwen wrote to ask about the Negative Income Tax which is one of those concepts that always seems to be discussed in favorable terms but never makes it on to the policy agenda. The basic idea, due to (or at least put forward by) Milton Friedman is that the tax system should consist of a flat grant and tax levied at a proportional rate on all incomes. The ‘negative’ part comes from the fact that people on low incomes would get money from the government and would therefore pay negative tax.

I’m sympathetic to the general concept, but I think it’s necessary to take the whole tax-welfare system into account. The implied objective then is to make positive transfers to low-income individuals and families while giving everyone roughly the same effective marginal rate of taxation. From this perspective, as the OECD noted the other week, the big problem is high effective marginal rates of taxation for low-income and middle-income families.

This is a difficult problem because, in general, I would like to make the grant component large for families with children (a view shared by government). It’s difficult to do this, apply a common marginal rate and hold the cost to revenue of the initial grant down to an affordable level.

Categories: Economic policy Tags:

The national comparisons game

March 14th, 2005 52 comments

Tim Blair points to this exercise asserting that the EU is twenty years behind the USA. As Tim subtly points out, it’s absurd to suggest that the EU today (home of Nokia and Airbus, and birthplace of Linux and the World Wide Web) is comparable to the US when Atari boxes were the state of the art. Unfortunately, Tim’s irony is lost on his commenters, who assume the report deserves to be taken seriously.

To ram the point home to his slower readers, Tim might do well to point to the fact that, in terms of output per hour, several European countries are ahead of the US. Of course, when hours worked are taken into account, the US regains the lead, but on that criterion, Britain during the Industrial Revolution was ahead of any modern country.

The real point is that productivity differences between modern economies are so small that, by selecting the right criterion, any developed country can be made to look better, or worse, than any other. The report is explicitly described by its promoters as a “wake-up call” designed to scare Europeans into adopting the policies favored by its promoters. Having seen this kind of thing going on since the 80s, when Australians were terrified with the prospect of becoming the “poor white trash of Asia”, I find such reports more soporific than alarming.

Categories: Economics - General Tags:

There’s something about royal visits …

March 14th, 2005 28 comments

… that reduces presumably rational people to babbling incoherence. In today’s Age, Christopher Scanlon of RMIT writes

Australians want monarchs who maintain the fantasy of monarchism, who embody the impossible ideal of monarchy …The problem with the Windsors is that they’re just too much like us. Their lives are as complex and contradictory as our own. And because of that they’ve soiled the fantasy of monarchism as some kind of divine state.

and two paras later

The Danish royals appear enough like us to be comfortable; they’re not aloof like those stuffy dysfunctional Windsors.

BTW, I found the same problem myself. I was going to write on this topic and suggest that we pass our own Act of Succession, offering the Australian throne to the highest-ranking European Royal willing to marry an Australian[1]. I thought this would go over well with both monarchists, republicans who care only about having an Australian head of state, and aspiring princesses/princes, between them enough to make up a majority. Then I realised that, unless the legislation was drawn up carefully, we might end up with Prince and Princess Michael.

fn1. I see Mark McKenna has much the same idea.

Categories: General Tags:

Propaganda and advertising

March 14th, 2005 7 comments

This NYT report shows how the Bush Administration has been producing covert propaganda, which is then shown on US TV stations as news, with actors posing as reporters. It would take much more than this to surprise me in relation to the Bush Administration, and in any case, the practice apparently began under Clinton.

What did strike me was that, while the NYT went in for plenty of handwringing about the government manipulating the news, the report showed no concern about the fact (news to me) that corporations have been doing this for years, more or less openly, to the extent that those involved in producing “video news releases” have their own association, annual awards and so on

Under the Bush administration, the federal government has aggressively used a well-established tool of public relations: the prepackaged, ready-to-serve news report that major corporations have long distributed to TV stations to pitch everything from headache remedies to auto insurance.

Of course, reprinting press releases with minimal editing has been a standby of lazy journalists for decades. But the standard press release story opens with what is presented as a paraphrase of a quote “In Washington today, Senator X criticised the neglect of problem Y …” or whatever. Even if the reader is led to imagine that the statement was actually made to an audience of reporters, there’s no serious deception, though a well-designed press release can certainly ensure that the writer’s key points get prominently reported in a way that makes them seem like fact rather than opinion.

But the video news release goes way beyond this. The closest analog in the print world is those supplements, designed to look like news, with “advertisement” in small print at the bottom of the page.

I don’t know anything about the legality of all this. Here in Australia, radio commentators got into a heap of strife over “cash for comment”, accepting money from corporations to say nice things about them. But this was advertising presented as opinion. Presenting advertising as news seems far worse to me.

The issue of paid-for or sponsored political comment has already arisen in relation to blogging. It seems unlikely that commercial PR can be far behind, if it isn’t here already.

Categories: Metablogging Tags:

Monday Message Board

March 14th, 2005 37 comments

It’s time for the regular Monday message board, where you are invited to post your thoughts on any topic. If any NT readers are battened down for Cyclone Ingrid, but still connected to the Internet, now’s your chance for a live report. Civilised discussion and no coarse language, please.

Categories: Regular Features Tags: